FocusAsia SBR may extend falls on abundant China exports

11 July 2013 03:59  [Source: ICIS news]

By Helen Yan

SBR is a synthetic rubbers used in the manufacture of tyres for the automotive industry.SINGAPORE (ICIS)--Spot styrene butadiene rubber (SBR) values in Asia look set to fall further this month as regional supply is being bloated by Chinese exports that are available at competitive prices, industry sources said on Thursday.

On 10 July, non-oil grade 1502 SBR prices were assessed at an average of $1,625/tonne (€1,268/tonne) CIF (cost, insurance and freight) China, down by $400/tonne from a month ago, according to ICIS data.

Offers this week from South Korean producers were at around $1,700/tonne CFR (cost and freight) Asia, market sources said.

China’s domestic SBR prices are low, enabling its producers to set exports offers that are lower than those of other Asian producers, industry sources said.

Non-oil grade 1502 prices in China’s domestic market are hovering at around yuan (CNY) 10,000/tonne, which is equivalent to around $1,400/tonne FOB (free on board) China, industry sources said.

“We have offers for non-oil grade 1502 SBR at around $1,400/tonne CFR India for China-origin product, compared with other Asia-origin product which are at least $200/tonne higher,” an Indian trader said.

China, as well as the whole of Asia, is beset with high SBR inventory because of a general slowdown in car sales amid weakness in the global economy. SBR is a synthetic rubbers used in the manufacture of tyres for the automotive industry.

“The Chinese domestic SBR market is very weak and the Chinese suppliers are exporting their stocks to other countries in Asia,” an industry source said.

With China competing for buyers in the Asian SBR market, industry players expect downward price pressures to intensify this month.

“Demand in China is shrinking as tyre makers in China have further reduced their operating rates to around 70% capacity in July from around 80-90% in the first half of this year,” the industry source said.

To stem the decline in Asian SBR prices regional producers such as South Korea’s LG Chem, Taiwan’s TSRC and China’s Shen Hua have curtailed production to tighten supply.

“It is primarily an oversupply situation. Once the Chinese SBR producers further cut their production output, SBR prices will bottom out and start to rebound,” another industry source said.

($1 = €0.78 / $1 = CNY6.13)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Helen Yan
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